Gilt Groupe – “brilliant and insidious”

The Nudge blog has never bought anything off Gilt Groupe, but does agree with Virginia Heffernan that it is “brilliant and insidious.” As far as successful businesses go, it mines lots of powerful behavioral insights. It taps into aspiration by exclusively selling luxury goods, a lot from brands that are so exclusive you hadn’t heard of them before logging onto Gilt. By offering deep discounts it uses anchoring to give buyers super high reference utility (ie. the feeling that you’re getting a great bargain). It taps into two types of scarcity–products and time–to overcome procrastination. A new sale starts every day but there’s only a few luxury goods actually in stock so you have to hurry up and buy them NOW! because they aren’t going to be around in 15 minutes. It taps into competitiveness. Demand does way outstrip supply so you have to be quick on the click to get your order in.